Instep Today

The tax-man bogey-man strikes again

Instep Today
By Instep Desk
Fri, 02, 20

24 bridal couture designers served notices by FBR for evading taxes but wait, the list is an exact replica of an exhibition announcement!

It’s now customary for big stars to declare just how much they paid in taxes. The more you pay means the more you made. In Bollywood, from Shah Rukh Khan to Salman Khan to Amitabh Bachchan, the name at the top of the list may vary but it is always there. Ditto for their Hollywood counterparts, whose earnings after taxes subsequently help in determining who was the highest earning star of a given year. Just ask Forbes.

Stars here in Pakistan haven’t always been as transparent about their earnings and it’s an unsaid rule that one doesn’t discuss money matters when discussing actors, directors, producers and even designers, who all rake in millions via their lucrative businesses.

Designers have actually had a tough time dealing with taxation as the tax-man emerges every now and then, demanding audits and implementing various kinds of additional taxes, some fair and some unjustified. In the latest crackdown, certain fashion houses have been noticed by the Federal Bureau of Revenue (FBR).

According to a breaking news story on Geo News, FBR sent notices to 24 bridal couture designers for allegedly evading taxes. It was further reported that these designers didn’t pay due taxes and as a result work on their audit had begun.

Read the FBR notice: “Some of the designers even charge millions for a single dress but when their Income Tax returns were analysed it was found that quite a large number of these dress designers are paying very meager amount of tax i.e. their declared income does not commensurate their receipts.”

The notice, titled, ‘Massive Evasion of Tax By Marriage Dress Designers’ further noted, “Their returns are being analysed and desk audit is being conducted. The information obtained about their income would be cross matched with declared income and wealth statement filed and withholding statements filed by withholding agents. It is estimated that a huge loss would be detected.”

If done fairly, one would applaud the effort made to pinpoint and eradicate tax evasion from the system. But, upon investigation, it oddly appeared that this list of alleged tax evaders was in fact a list of designers scheduled to exhibit their cotton collections at multi retail store, Ensemble. The names, and even the sequence, were identical.

It’s hard to believe that designers who have stores and easily accessible studios, like Sania Maskatiya, Wardha Saleem and Nida Azwer, aren’t paying their dues; their businesses are quite transparent. There are many names on this list that are really small names and almost struggling labels. One wonders what the FBR has been researching and where it is getting its information.

It’s actually those who are still operating from private studios (mostly in their homes) that are the big players and probably biggest tax evaders. There are bridal couturiers that charge in the millions, mostly in cash and therefore undocumented. The FBR maybe needs to dig a little deeper and first nab the actual evaders rather than run with a list of exhibitors who may or may not have committed a crime.